1. LARGE, MID & SMALL CAP FUNDS

2. LARGE, MID & SMALL CAP FUNDS
Understanding the
difference between
Large Cap, Mid Cap
and Small Cap Funds.

3. LARGE, MID & SMALL CAP FUNDS
The Indian Premier League (IPL) selection
process whereby the team owners bid for
players bears similarity to how fund
managers select stocks. In this lesson we
have attempted to use this similarity to
explain the difference between large cap,
mid cap and small cap stocks.

4. LARGE, MID & SMALL CAP FUNDS
Players like Pollard, Chris Gayle, Shane
Watson, Dale Steyn comprise a bunch of high
quality-higher priced players. They are
priced higher at the auction but team owners
are willing to pay a high price as these
cricketers have proven themselves under
different conditions and are expected to
perform well. Not much research needs to be
done about them because they are already
champion cricketers.

5. LARGE, MID & SMALL CAP FUNDS
These higher priced champions are
somewhat like Large Cap funds which
invest in big and higher priced companies
which are expected to do well. But being
higher priced, their returns could get
muted unless their performance turns out
to be exceptional just like that of Chris
Gayle.

6. LARGE, MID & SMALL CAP FUNDS
Then
there
Kartik,
are
players
Parthiv
like
Patel,
Murali
Robin
Uthappa, Ashish Nehra, Irfan Pathan, Yusuf
Pathan, R P Singh etc who have played in
the past and in that sense have established
their credentials and may also play for
the Indian cricket team in the future.

7. LARGE, MID & SMALL CAP FUNDS
Not much research is needed but these
players are not in any position to charge a
premium either. They are expected to do
well due to their experience but not as
well as the big players who are in prime
form or who like Gayle can tear a
bowling apart on their day and win
matches single handedly.

8. LARGE, MID & SMALL CAP FUNDS
These players are like the Mid-Cap funds
which buy the stock of companies that are
established but not having the stature of
large cap stocks. Hence they are not as highly
priced as large cap stocks. Most are expected
to do well while some of them could
surprise with their performance and in future
may enter the large cap fund portfolio.

9. LARGE, MID & SMALL CAP FUNDS
However, players like Sanju Samson, Aditya
Tare, Mohit Sharma are relatively new.
They were given an opportunity to play and
prove themselves. Hence they are
relatively less pricey. And they did
exceedingly well, returning handsome
returns in terms of the value to their
owners.

10. LARGE, MID & SMALL CAP FUNDS
Similarly, in Mutual Fund parlance these
are like small cap funds that invest in
relatively unknown stock some of which
have the capacity to deliver surprising
results and good returns. Naturally
since they are relatively cheaper, their
returns may outperform large cap
funds.

11. LARGE, MID & SMALL CAP FUNDS
While less research may be required
for large cap stocks, research
needed to identify high quality mid
cap and small cap stocks is
relatively much more intense.

12. LARGE, MIDACCOUNT DEFICIT
CURRENT & SMALL CAP FUNDS
Let us see the formula of the Current Account Balance (CAB)
CAB = X - M + NI + NCT
X = Exports of goods and services
M = Imports of goods and services
NI = Net income abroad
[Salaries paid or received,
credit / debit of income from
FII & FDI etc. ]
NCT = Net current transfersHope this lesson has thrown
[Workers' Remittances
some light on the concepts of
(unilateral), Donations, Aids &
Large Cap, Mid Cap and Small
Grants, Official, Assistance and
Pensions etc]
Cap Funds.

13. Please give us
your feedback at
professor@tataamc.com

14. DISCLAIMER
The lesson is a conceptual representation and may not
include several nuances that are associated and vital. The
purpose of this lesson is to clarify the basics of the
concept so that readers at large can relate and thereby
take more interest in the product / concept. In a
nutshell, Professor Simply Simple lessons should be seen
from the perspective of it being a primer on financial
concepts.
Mutual Fund investments are subject to market
risks, read all scheme related documents carefully.